Lean startup, entrepreneurship course. Session 1. Idea and realization. The course itself consists of 4 classes and can be found at Saleup.biz (direct link: https://goo.gl/W1LVahP). You can contact me through that site as well.
The economy of knowledge
The knowledge economy is the use of knowledge to
generate tangible and intangible values. Technology
and, in particular, knowledge technology help to
incorporate part of human knowledge into machines. (c)
In last 30 years, society in a whole has
undergone the transition from the post-industrial
economy to the economy of knowledge.
The ECONOMY OF KNOWLEDGE as
a definition highlights the importance of the knowledge
that became the ultimate competitive advantage in the
Within the scope of the economy of knowledge, the
knowledge itself can be seen as a complex paradigm.
The knowledge can:
Result in the competitive advantage.
Increase the efficiency and effectiveness of the
In the way of IP (intellectual property) can be the
main asset of the business
Thus, the importance of the knowledge in the Economy
of knowledge cannot be stressed enough.
Fruitful debut idea
The economy of knowledge made it relatively easy start a
new business. Internet and era of digital content brought
numerous opportunities for the entrepreneurs. From the
beginning of the dot coms era the entrepreneur didn’t need
a huge amount of money to invest into the fixed assets of
the real economy new business.
Instead, internet startup could have been and still can be
created in the matter of days with the very modest
investment. It resulted in a boom of dot coms and other
technology related startups. All these startups had some
IDEA behind them.
Approaches to the generation of such an idea included:
Transition of the ideas from the real world to the virtual
world (notepad-> Evernote, Facebook, etc.)
Digital world specific ideas (VR etc.)
Digitalization of the existing and appearance of the new
In the world where information and knowledge mean
success the idea as part of the knowledge means a
significant part of the success. Could you imagine that
Facebook costs more than Gazprom? What are the COGS
portion in the final iPhone price?
What is the best way to start your startup?
There are several ways the new startup ideas come
into this world. To name the most common: organic,
observation and artificial ways.
I would say the best are just ideas that make the
personal life of the inventor more enjoyable or
productive or accessible or meaningful. At some point,
the author decides that other people may also benefit
from this very idea, and she builds a business around it.
If the move was right, the customers will follow.
Is when a future founder notes that there is a process
or situation at their work or elsewhere that can be
further improved, and this improvement becomes a
“Blue ocean”, brain-storming born and other ideas that
normally generated because of the need to generate
No important how the idea was born it should address
some real need or problem that exists in reality. Not
always though. PetСube?
Should your idea be innovative or can it be something marginally new?
As a matter of fact, you can find many examples when
revolution ideas never resulted in sustainable business
and when they did. As well as you can find many
examples of marginal improvements that resulted in
sustainable business, and that did fail.
Both approaches have its benefits and drawbacks.
Revolutionary idea. Think about “innovation
diffusion” theory. You will have to develop a market
for your idea. You will need to educate the customer. It
is a long run. You will have an advantage of the first
mover though. But you can lose it easily.
The improvement. The idea was validated already.
Everything will depend on the execution excellence.
You do not have a budget they have though. And
head to head competition will require 3-5x of their
marketing budgets. Find your niche. Facebook wasn’t
the first social network. Nor was Twitter. And
thousands that died already.
The truth is though, with the diligence, persistence and
luck either approach can result in sustainable business.
With the probability of less than 10%.
Isn’t it too late? They invented everything.
No, they didn’t. They didn’t in 15th, 19th, 20th and 21st
century. Nor they will in 22nd. There are several theories of
There are several types of progress:
As a summary it is worth saying that there are still unknown
number of unknowns for us to stop worrying about the
availability of unknowns.
It can be a bit late because of the other reasons. The price of
the entry ticket may go up and available industries have
higher new entrants’ barriers. That will be discussed later in
the course though.
Should you patent your IP?
When talking to the VCs for the first time, we asked
them to sign NDA, and they were laughing. The idea
itself unless it is hardcore technological invention
shouldn’t be patented/protected. Or at least needn’t
The IP though is a core capital of the startup and can
help you gain a competitive advantage as well as
protect you from the competition or bring interest of
the acquirers and investors.
So, do you need to patent your IP?
For revolutionary ideas If it has real value – yes,
For marginal improvements – less so
And you will have your time and budget later. You still
can do small things. Filling the patent is expensive?
Register a trademark.
Can you sell the idea?
Usually you cannot. All possible acquirers will want the
idea to be confirmed by the market. “Yes, but they can
buy me out right now while I am cheap” argument
doesn’t work either. Most certainly they will prefer to
pay more on the later stage when risks will be also
reduced. $50m profitable startup is a candy everybody
wants as an acquisition target. $5m cash burning
company is still a question mark and they will be
reluctant to move.
Only if it is patented and of real value obviously. And
selling the ideas goes in direct contradiction to
everything we are discussing here. Selling raw materials
is always a fail. You should sell the products with a lot
of added value.
The very reasonable comment from the potential buyer
or investor on this stage would be “If your idea that
great why do you selling it that early? It looks as if you
don’t believe in it yourself. And if you don’t why should
In the case of a startup, you shouldn’t sell the idea. You
should build a sustainable business around this idea
and sell a company and join Forbes 100 list.
Why are you here? Formulating the goals of your company
In general, the business is about making money. Your
goal is actually to make that money, Is it enough? No.
Other people wouldn’t help you do so because they are
busy with making money for their own families.
There is probably some bigger idea you are having in
your head. That will be the mission statement of your
Apple designs Macs, the best personal computers in the
world, along with OS X, life, work and professional
software. Apple leads the digital music revolution with
its iPods and iTunes online store. Apple
We gather exceptional talent from all over the world
with various backgrounds, beliefs, and perspectives, but
we all share one common dream: change things for the
better and leave a mark on the world. OnePlus
What is yours?
On a practical note though you want to make money by
doing the exit through strategic acquisition or IPO.
Why is it important to have the goal?
Because it is what makes a difference. Because
only companies that know WHY can grow big
and do it fast.
1. Everybody knows what they are offering.
2. A few know how they are implementing what
they have offered.
3. Almost no one can explain WHY they are
doing what they are doing.
A mission is not only a word. People tend to like
being the part of something big and important.
You are not like the others. You are a “purple
cow”. A purple cow with the mission. An
What stress-test should the initial idea survive?
You should consider these questions when assessing
the idea for your new venture:
Does it address any real pain or need of the
How do you know the need is real?
Is your potential market or niche big enough to
allow for dynamic growth?
Are you limited by geography?
What initial investments the idea would require?
Do you have a team to get this ball rolling?
Who you compete with?
What knowledge or technology you miss to start
Can you start it initially as a part-time project?
Are people willing to give you their money for that
product or service you are offering?
These are initial and broad questions. Based on the
specifics of your product/service and your market/niche
there can be others.
Wannabe… Entrepreneur. No more work for hire
Apart from the valid and crucial discussions on the idea,
its viability, the business model, monetization, etc. you
should also consider personal aspects of your move.
The decision to leave your work and career and start
your own business will have several implications for you
and your family. Consider them.
Going away from fixed and sometimes good salary
will bring a lot of uncertainty and increase the level of
During the bootstrapping times, your family will also
be bootstrapping. Are they ready?
Your schedule will get the extra digit in the number
of working hours.
Your social life and social status may suffer in the
You put at risk your self-esteem. What if you fail?
Your life will lack a balance from now on.
When people talk about the entrepreneurship, one of
the definite pluses they mention is this “freedom.” You
work for yourself; you report to no one. And then goes
this: “you can even skip the work day if you feel like
that”. You can. Right. But… “Tell me, Mr. Anderson… what
good is a phone call if you’re unable to speak?” What
good is a right you never use? In the own business, you
are as powerful as Genie. And yet you are a slave to this
But at this point, you would never exchange this slavery
for the freedom of going home at 6 pm.
Your first steps… Your last steps.
90% of the startups will never make it. Much like in
the animal world the younger startup is, the more
probable its death. There are a hundred ways to lose
your business and just one way that leads to success. I
am still not sure which one road I am personally
pursuing now. The problems that may cost you
Conflicts between the founders
Lack of attention to the details
Changes in the competitive landscape
I am about to start reading the new book. Kinda tired of reading old. Danger
Startup movement is a community. It has a busy life.
It has a lot of events, drive, parties. You are here not
because of that stuff. You need the networking but
only to grow your business. Startup is more about
hard work and less about parties and events.
You are full of ideas and formulating the ideas for that
next big thing daily? Keep formulating but don’t try to
execute these right now. Yes, you need to monitor
changes in the industry and be ready to adjust or even
pivot. But the startup is mostly about persistency in
the execution. Daily portion of the fresh ideas can be
From the dialogues of the startup CEO and
experienced VP of Business Development of the big
CEO: Gosh I am generating new hot ideas daily!
VP: And my work is to filter those ideas to be able to
concentrate on what’s matter.
And yes, you cannot run two or more businesses
simultaneously. If your function is more than pure
ideas generation you just won’t have enough time.
Art Berman, MBA
Art Berman is a successful serial
entrepreneur who has founded a number
of companies in the technology industry.
Mr. Berman brings more than a decade of
entrepreneurial experience building and
advising successful software companies. Art
has managed worldwide online sales and
operations since 2003. Mr. Berman earned
his Bachelor degree in Economics from
Moscow International Business Institute in
1997 and Executive MBA in Edinburgh
Business School - Heriott-Watt University in